In his victory speech, President Obama promised energy self-sufficiency and factory jobs. Then, too, it was re-elected Sen. Debbie Stabenow who once reminded us factory jobs were what helped make America an economic powerhouse saying, "We make and grow things in Michigan". But compared to China, our manufacturing jobs are in decline.

In 1980, China had 42.4 million manufacturing workers and the United States had 19.8 million workers. In 2010, China had 76.1 million workers in manufacturing jobs, and the United States had 11.5 million.

Not only did China's work force nearly double, but it also became more productive. Productivity per worker grows as capital investment increases worker output, China's productivity growth averaged 17 percent annually between 1995 and 2002.

Not surprisingly, China's manufacturing gives it a productivity edge over India's help-line phones and other service jobs. China's productivity growth also pushes its wage levels ever closer to Western countries and also augments its national standard of living statistics.

Advertisement

Much of China's factory power results from foreign direct investment (FDI). By 2010, FDI of $1.8 trillion had been invested in China by other nations. In 1990, FDI was less than $20 billion. In one famous case, an entire steel plant was dismantled in Germany and reconstructed in China. Of China's 2010 FDI, $60.5 billion came from the United States

By comparison, in 2010 cumulative FDI in the United States was $2.3 trillion. Canadians and Europeans had invested more than half at $1.9 trillion, with Japan and Australia responsible for most of the remainder. However, despite U.S. productive capacity, China's manufacturing engine makes it the world's largest exporter at more than $2 trillion. As shoppers at Wal-Mart know, the United States is a top customer at 20 percent of the total. Europe is the other top customer at about the same percentage rate.

Despite America's historical FDI and despite a saved auto industry, there are still shuttered factories everywhere. Consequently, nearby residential neighborhoods are dotted with for-sale signs. It is estimated that nationally, 55,000 factories have been abandoned, with exact statistics surprisingly lacking, given the enormity of the problem.

Factory jobs produce multiplier effects. Wages spent at the barber, the grocer, neighborhood restaurants, strengthen the economy. According to a 2003 study, every factory job supports 2.9 service jobs. Similarly, lost factory jobs result in lost service sector jobs in the same proportion. Thus, when U.S. factory jobs are outsourced, not only do factories close but so do service sector businesses fail.

Politicians say small businesses are the engine of job creation. But these jobs are mostly in the service sector and can't grow without supportive factory payrolls. Similarly, government jobs mainly render services, so they, too, must rely on factory wages to generate supportive tax revenues.

The problem for Obama is how to crank up our manufacturing base, which made the United States prosperous. To induce factory investment and worker hiring, reducing corporate tax rates would be a start. Despite the good reputation of U.S. workers, infrastructure, energy sources and suppliers, U.S. corporate tax rates are the highest in the world and thereby dissuade investment. Tax breaks for repatriating outsourced factories would also help.

Because energy independence is yet another way to bring productive jobs home, our abundant natural gas could be utilized by our national truck fleet to reduce foreign oil dependence. Cutting back oil imports with domestically produced energy would not only provide jobs but would also reduce the trade deficit and our involvement in Middle Eastern political turmoil. "Drill baby drill" and mining coal remain our immediate fix.

A hope-smitten Obama has made many dreamy promises that he hasn't delivered. Journalist Michael Moran says a "hypnotic trance" has replaced the American Dream. Let's hope now for some pragmatic realism from Obama, to induce private sector investment in American factory jobs and energy self-sufficiency.

Thomas K. Bullen of Clarkston is a retired Oakland County businessman.